Sustainability of SHG Institutions: Study of Best Practices

byDGRV, APMAS & Enable

Supported byGTZ and NABARD

Research TeamGuidance:GTZ: Marie L. Haberberger & R. RamakrishnaAPMAS: C. S. Reddy & S. Rama Lakshmi Study Team:• Dr. Wolfgang Salomo, DGRV• Dr. G. Bhaskara Rao, APMAS & Enable• Mr. Naveen Kumar, APMAS• Representatives of NABARD• Representatives of Enable

Context• Emerged largest community based mF model in

the world; as on March 2009– Saving linked SHGs: 6.12 mn; amount Rs.55.46 bn– Credit linked SHGs: 5.76 mn; amount Rs.391.44 bn– Loan outstanding SHGs: 4.22 mn; amount Rs.226.8 bn

• Issues of quality, sustainability, policy contradictions, predominant focus on credit, limited attention on saving, democracy and social agenda

• Evolved independently in different parts of the country with very little cross learning

• Good scope for cross learning

ObjectivesTo contribute for the sustainability of SHG

institutions in India. The specific objectives are:• To learn the best practices in respect to promotion

and functioning of SHG federations• To understand the underlying factors behind the

successful SHG systems• To collect and document all the best practices in SHG

institution in different parts of the country and disseminate the results for the benefit of all stakeholders in the sector.

Methodology

• Collect information about Federation through publications and resource persons

• Post a question on Solution Exchange• Identify best federations from available

information and through Enable members• Short listed over 20 federations for field visit

in 7 states – AP, Karnataka, Tamil Nadu, Maharashtra, Rajasthan, UP & WB

Methodology

• In each visited federation, the research team interacted with promoters, board of Apex Fed, boards of two PLF and four SHGs

• Objective assessment of quality of visited federations using APMAS’s ‘GRADES’ tool

• Qualitative information was collected through focused group discussions using separate check lists for each category of respondents

Progress and Framework

• Visit of 10 Federations in 5 states has been completed

• Review of available literature is in progress• Based on the insights gained from the

literature review, a tentative sustainability framework has been developed.

Visited Federations

State Federation/ SHPI Fed./ SHPI

Rajasthan Savera/ IBTADA Saheli Samiti/ PRADAN

UPShakti Mahila/ RGMVP

Shakti Mahila/ Shramika Bharati

WB Bagnan MS/ DRDA NBTMS/ CDHI

KarnatakaHD Pura CMRC/ Myrada

Koyiloor/ SKDRDP

Tamil Nadu Maduranthakam MBT/ SNFL

Jawadhi Tribal Women Development Society/ Don Basco

Core Elements of Sustainability

• Institutional sustainability (IS)

• Financial Sustainability (FS)

• Legal and Regulatory Framework (LRF)

• Promotion

• These issues will be discussed with available data and information. Before that .. Definition of Best Practices

Some definitions of Best Practices

• Have large impact• Cost effective• Enhanced sustainable• Total involvement of, and, ownership by, the

primary members• Promoted self reliance• Able to develop a vision and realize it• Strong demand system• User friendly systems• Promotes inclusion and equity

IS: Ownership & Governance• SHG membership is growing at fast pace –

– saturation in AP; – 1.5 million families covered by SKDRDP – a NGO – Extension model by Myrada; – Convert project participants into SHG members by

Pradan, Bagnan, CDHI; Don Basco– Adoption of SHG institutions to fulfill their own

missions/ projects by SGSY/ NRLM; Shramik Bharati; SERP; RGMVP; Don Basco

Unhealthy competition between GO Vs GO (banks); GO Vs NGO; NGO Vs NGO

IS: Ownership and Governance

• Federations are deeply involved in the loan process and recovery

• Federations became important source of information for SHGs about available opportunities

• Still heavy dependence on Promoters/ staff and leaders (Not able to control own staff)

• Focus on leadership (some risks)• Top down approaches

FS: Vision, strategy, plan & systems• Very few federations have vision. Articulate

accomplishments/ activities as Vision. Exception Myrada and SNFL

• Strategy: Totally dependent on promoting agencies• Plan: Heavy dependence on promoters/ staff and

leaders• Good systems at few places – SNFL separate

meetings for internal funds transactions and external funds transactions; bonus distribution in SNFL and SKDRDP

FS: Products & ServicesFinancial services – • Loans grossly inadequate. Banks are not

cooperating in north. MFIs/ Federations provide limited loans – Exception SKDRDP provide multiple loans, de-linked loans with saving and repayment schedules

• High interest, exception SKDRDP and AP• Regular interest payment on thrift in Bagnan• Many restrictions in the use of internal funds• Insurances are sold not marketed. SKDRDP

and SNFL are providing social security

FS: Products & Services

Non-financial services by federations• Federations provide book keeping services in all

places (including training of book-keepers)• Auditing of SHG books in few, (paid by SHGs in

Myrada and Shramika Bharati)• Fed. promoting new SHGs in many places (as

strategy to increase membership/ income at SB)• Paid Community Resource Persons (CRPs) in few

places and unpaid CRPs in many places• Fed. help in loan process and recovery

FS: Social Services• Almost all fed are involved, but focus is different. • Provided platforms to women. Health and

hygiene are most common services• Bagnan Fed. promoted a NGO to take up social

services• SHGs in Myrada and SKDRDP are involved in anti-

liquor agitations• IBTADA groups are focusing on women/ girl

education and gender issues• Social security programs of SNFL and SKDRDP

FS: Livelihoods & Marketing• Consumption protection – Food security in AP,

door to door sale in Bagnan, shops and network marketing in Myrada and Saheli Samiti

• Large number of employment opportunities for CRPs in SHG institutions

• Vocational training and placement/ marketing support in many places (Myrada, SNFL, SKDRDP)

• AP: community managed sustainable agriculture (CMSA), BMCUs management, procurement of Paddy, Dal, Maize, NTFPs

FS: Livelihoods & Marketing

• Brand development for SHG members’ products ‘SIRI’ in SKDRDP. Rs.20 cr. turnover, 5000 women

• Accessing of many development programs – transfer of farm technologies

• Permanent and temporary exhibitions under SGSY

• Don Basco at Jawadhi hills - Conservation of natural resources; Bidding for development works; transport support for marketing; group level economic activities. Brand development is under process

Legal and regulatory framework• Fed in north want to take up financial

intermediation, but are scared of registering under old cooperative act.

• Need MACS act in all states• Federations in Myrada are scared of any

registration. Prefer self regulation vis-à-vis outside regulation

• SNU of APMAS could be a good frame for self regulation

• PEDO practices of annual review of accounts, annual bonus, etc, could be other option

Promotion: Funds

• GOI – SGSY: More focus on Livelihoods and less on institution development

• State Governments – target approach, no role transformation plan, not involving NGOs

• International donors are migrating to MFIs • NABARD is only donor. But limited focus on

institutional capacity building (ICB). Even less focus on capacity building of SHPIs

Promotion: Policy contradictions

• Banks are shying away from SHGs, despite good business potential. (Growth of MFIs)

• Loan wavers• Corruption in SGSY and its adverse effect on

SHG – banking• Target approach by the state governments

and taking over of SHGs promoted by NGOs• NGOs are forced to become MFOs

Thank you

Open for discussion